About Poverty and Inequality in Japan

Abstract

As a result of the ageing of the population, shifts in the structure of households, changes in the labor market in the last two to three decades, in Japan, there is a gradual strengthening of the initial income disparity, as well as some increase in relative poverty rate. However, through the mechanisms of redistribution of income embedded in the pension system and medical insurance system, as well as through the provision of material support to the least protected segments of the population, the state has managed to restrain these processes. Measures taken to support families with children in recent years have been particularly important. They made it possible to reduce the rate of relative child poverty and keep income inequality among this group of families on a relatively low level. Obviously, current income, by which the level of relative poverty and income inequality are measured, cannot clearly indicate that a family or a particular person live in poverty. In addition to the current income, the standard of living also depends on the amount of financial savings, the availability of real estate, the possession of securities, etc. For example, older citizens, who are among the least well-off in terms of current income, have the largest share of the country’s accumulated financial assets. The results of opinion polls conducted annually by the Prime Minister’s Cabinet Office show that the changes taking place in the country have not led to the transformation of the Japanese “middle class society” into a “divided society”. For more than half a century, the absolute majority of the Japanese, about 90 percent, when asked how they would rate their families’ standard of living, chose the answer “middle level”. At the same time, in the composition of the middle class, there was a shift towards the increasing share of the more well-off (middle and higher) strata. In general, Japanese society remains healthy and prosperous. As for poverty, unlike Russia, where it is a consequence of blatant social injustice and extreme social contrasts, in Japan, in our opinion, it is not systemic and arises as a result of some particularly unfavorable, exceptional circumstances in which a family or a person find themselves.